The Viability of Antitrust Price Squeeze Claims

This Article examines the law and economics of the price squeeze, and concludes that strictly cost-based predatory pricing tests such as the one the Supreme Court developed in its 1993 Brooke Group decision are not always appropriate to the concerns being raised in a price squeeze. This Article also considers several efficiency explanations, the importance of joint costs, situations in which the dominant firm uses a squeeze to appropriate the fixed-cost portion of the rival’s investment, as well as those where the shared input is a fixed rather than variable cost for the rival. Ultimately, it concludes that there is little room for antitrust liability except in one circumstance: where a squeeze is used to restrain the rival’s vertical integration into the monopolized market. That situation is not captured by the Linkline’s cost-based rule.